Why small screens won't cure Microsoft's Windows tablet blues

My, how quickly the tables can turn in the fickle world of consumer technology.
When Microsoft’s designers and engineers took to the drawing board to dream up Windows 8, the 9.7-inch iPad was the 800-pound gorilla of the tablet market, gobbling an insane amount of market share and laughing at Android’s attempts to break Apple’s stranglehold on slates. The future, it seemed, lay in big screens.
Then the Kindle Fire, the Nook tablet, and Google’s Nexus 7 appeared. Consumers fell in love with smaller, cheaper tablets overnight, and on October 23, 2012, Apple capitulated to popular demand and released an iPad mini of its own.
Three days later, Microsoft released Windows 8 to the public. With a design optimized for 10-inch-plus displays, it was already behind the times.
“”Although Office is a nice thing to have, it is not enough of a differentiator.””
Now, with Windows tablets struggling to catch consumers’ attention, Microsoft is shifting gears. The company has already paved the way for smaller Windows tablets, and Windows co-chief Tami Reller promises that the impending Windows Blue update will pack even better support for 7- and 8-inch slates. Asus and Acer have hopped aboard the diminutive display bandwagon, where other manufacturers are bound to join them.
Prepare for the deluge!
But before the floodgates open, I have to ask: Are small screens really the cure for Microsoft’s Windows tablet woes? Ehhhh…
Small screens, small price tag
Before we discuss anything else, we have to talk about price. Android is freely available to manufacturers (though many OEMs pay “don’t sue me” royalties to Microsoft). On the other hand, Microsoft makes a big chunk of its money by selling Windows, and that includes selling Windows to manufacturers. Basically, Windows tablets will always cost more than a similarly spec’ed Android tablet.

Windows tablet enemy, thy name is Nexus.
That alone could be a killer for small-screen Windows tablets. Paying $380 for an 8-inch Windows tablet (the price of the leaked Acer Iconia W3) seems crazy when you can pick up a Nexus 7 for $200.
Microsoft may be willing to compromise on this issue, however. Several recent reports have claimed that Microsoft is offering manufacturers steep discounts on Windows licenses destined for use on touchscreen devices with screen sizes under 10.8 inches. Pricing for those specialized devices is said to be as low as $30 per license.
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